(2) A sponsored captive insurance company formed under this chapter may establish and maintain a protected cell to insure risks of a participant if:

1. (a) the shareholders of a sponsored captive insurance company are limited to:

   1. (i) the participants of the sponsored captive insurance company; and
   2. (ii) the sponsors of the sponsored captive insurance company;

2. (b) each protected cell is accounted for separately on the books and records of the sponsored cell captive insurance company to reflect:

   1. (i) the financial condition of each individual protected cell;
   2. (ii) the results of operations of each individual protected cell;
   3. (iii) the net income or loss of each individual protected cell;
   4. (iv) the dividends or other distributions to participants of each individual protected cell; and

   5. (v) other factors that may be:

      1. (A) provided in the participant contract; or
      2. (B) required by the commissioner;
3. (c) the assets of a protected cell are not chargeable with liabilities arising out of any other insurance business the sponsored captive insurance company may conduct;
4. (d) a sale, exchange, or other transfer of assets is not made by the sponsored captive insurance company between or among any of the protected cells of the sponsored captive insurance company without the consent of the protected cells;
5. (e) a sale, exchange, transfer of assets, dividend, or distribution is not made from a protected cell to a sponsor or participant without the commissioner's approval, which may not be given if the sale, exchange, transfer, dividend, or distribution would result in insolvency or impairment with respect to a protected cell;
6. (f) a sponsored captive insurance company annually files with the commissioner financial reports the commissioner requires under Section 31A-37-106, including accounting statements detailing the financial experience of each protected cell;
7. (g) a sponsored captive insurance company notifies the commissioner in writing within 10 business days of a protected cell that is insolvent or otherwise unable to meet the claim or expense obligations of the protected cell;
8. (h) a participant contract does not take effect without the commissioner's prior written approval;
9. (i) the addition of each new protected cell and withdrawal of a participant of any existing protected cell does not take effect without the commissioner's prior written approval; and

10. (j)

    1. (i) a protected cell captive insurance company shall pay to the department the following nonrefundable fees established by the department under Sections 31A-3-103, 31A-3-304, and 63J-1-504:

       1. (A) a fee for examining, investigating, and processing by a department employee of an application for a certificate of authority made by a protected cell captive insurance company;
       2. (B) a fee for obtaining a certificate of authority for the year the protected cell captive insurance company is issued a certificate of authority by the department; and
       3. (C) a certificate of authority renewal fee; and
    2. (ii) a protected cell may be created by the sponsor or the sponsor may create a pooling insurance arrangement to provide for pooling of risks to allow for risk distribution upon written approval from every protected cell under the sponsor and written approval of the commissioner.